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Harper health care cuts: $8.2 billion less for Ontario

The Ontario government says the unilateral federal decision to limit the growth of the Canada Health Transfer will cost Ontario $8.2 billion -- $550 for every individual in Ontario.

The Ontario Fall Economic Outlook indicates that 59% of the Ontario  health care funding increase this year comes from the annual increase in funding from the federal government via the Canada Health Transfer (CHT). 

The federal transfer increase accounts for $752 million out of a total provincial health care increase of $1.272 billion. (Another $181 million comes from the increase in the Employer Health Tax revenue, with not much coming from other Ontario based revenue sources, like income or corporate tax.) 

The share of new funding paid for by new federal CHT funding is up from 56% in 2012-13 and 25% in 2011-12.  Federal CHT funding now provides 24.7% of Ontario provincial government health care funding.

Unfortunately, the federal government has unilaterally announced plans to reduce its increases for health care funding.  Given the role those increases are playing for health care in Ontario, this is significant.  

If this year was under the planned federal CHT funding model, Ontario would be out $340 million. As the federal cuts compound every year, the losses will increase every year. 

Interestingly, the Ontario Fall Economic Outlook did have a chapter on “The need for a committed federal partner” that says this about the federal CHT changes.

Investing in Healthy Ontarians
The unilateral federal decision to limit the growth of the Canada Health Transfer will have a significant impact on Ontario’s delivery of quality public services. Instead of maintaining the Canada Health Transfer growth rate at six per cent, the transfer is now expected to increase at the rate of nominal economic growth, starting in 2017–18.
This federal action will remove $8.2 billion from health care in Ontario by 2023–24, when the transfer will be up for renewal. This cumulative impact would be equivalent to reducing federal funding of health care by an estimated $550 for every Ontarian by 2023.....
It is increasingly apparent that federal fiscal arrangements are neither fair nor sufficient to address the needs of Ontarians. Among provinces, Ontario is fifth in ability to raise revenues from its residents. However, Ontario falls to last after federal transfers — including the Canada Health Transfer, Canada Social Transfer and Equalization — are taken into account because the outdated system of fiscal arrangements is out of line with current economic realities 
It’s good to see the Ontario government at least raise the federal government's unilateral cut to the CHT, but the Ontario government has a long list of complaints about the federal government and it is far from certain federal health care cuts are much of a priority for the Ontario government (although, at least it does seem that improvements in the Canadian Pension Plan are a priority).

CUPE, community based health coalitions, the Council of Canadians, and others are campaigning for a renewed federal Health Accord that maintains the current federal healthcare funding role.

Success is quite possible -- the Conservatives quickly backed off  on their immediate plans to cut the CHT when it briefly became an issue in the last election.  But our case for more federal health care funding for provincial governments is not helped if those governments do little more than go through the motions.

Projected Deficit: For years we have seen marked reductions in the deficit estimates, often in-year.  But there was no significant reduction in the Fall Outlook: it remains at $11.7 billion for 2013-14.  

Perhaps the Liberals are saving such announcement for the next Budget – when their fight for survival will hit fever pitch. 

But real growth in Ontario is anemic: it is now projected at 1.3% .  The Budget had projected 1.5%.  Moreover, the 2012 Budget projected 2.2% real growth 2013.   

As well, inflation is lower than projected (1.1% versus a Budget projection of 1.5%).  As a result "nominal growth" (i.e. real growth and inflation, the key drivers of government revenue) is only 2.5%, rather than the 3% projected in the Budget. 

Next year growth and inflation are projected to be higher, with 3.8% nominal growth.  But even this is dialed down from the Budget projection of 4.1%.    

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